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Dan Millman is a university student as well as a locally famous gymnast who dreams of winning a National Championship competition. He suffers from restlessness, and on one occasion Dan attempts to compensate for the restlessness by running along streets before sunrise. At a car-service station, he encounters an old man who seems to know more about Dan's problem than Dan himself knows, whom Dan later nicknames "Socrates". Dan is unsettled by Socrates' knowledge; by the fact that Socrates had appeared in a nightmare as a faceless janitor, clad in mismatched shoes (by which he is identified in waking life), who sweeps up the pieces of Dan's shattered leg; and by the old man's extraordinary speed, agility, and coordination. As a result of his exposure to the last, Dan seeks to learn the secret behind it.

Socrates, prodded by the impatient and defiant Dan, gives the boy a series of tasks and lessons. The central concept of "Soc's" philosophy is this: that one must live entirely in the present moment. Other ideas include the related notion that at no time is "nothing going on" and the idea that an appropriate time exists for fighting and another for abstaining from violence. These lessons are conveyed through practical lessons, long contemplation, and one spectacular mystical experience. Dan gradually learns to appreciate every moment; to view the journey toward a goal as more meaningful and significant than the attainment; to pay attention to that which he is doing – thus increasing his gymnastic prowess; and (to a slightly lesser extent) control himself. Throughout the lesson, Dan learns virtually nothing about his mentor, other than the philosophy, Socrates' belief that service is the most noble action possible (hence his choice to work as a car serviceman), and the presence of another protégé.

This protégé, a woman of Dan's own age named Joy, has learned and integrated Socrates' philosophy into her life, to the extent that she seems as wise as Socrates himself. Dan attempts to ask her for information regarding Socrates, but receives little. Joy treats Dan indulgently, though she evidently respects him.

One day, Dan drives recklessly, and his motorcycle collides with a car that ran a red light, causing his right femur bone to shatter. He is rushed to a hospital, where a metal bar is placed in his leg to maintain its integrity. As a result, his gymnastic coach believes that Dan cannot compete in the National competition. Dan, hurt by this lack of faith, recovers from the injury and resumes his training under Socrates' tutelage. Eventually, he is restored to full health and strength, while his coordination improves and his mind is set entirely on the present moment. He competes in the U.S. Trials for the Olympics and achieves a victory.

Slightly before the competition, Dan diverts the bus he is riding to Socrates' station, only to find that Socrates has vanished without a trace. At the arena, he attempts to teach his teammate Tommy what he has learned, but fails due to Tommy's emotional insecurity and lack of comprehension. Dan then is called upon for his turn to perform on the Still Rings. While he does his routine, Dan performs flawlessly just like Pommel Horse tryouts. Moments before he completes his routine, Socrates is in his thoughts asking him three questions: "Where are you, Dan?" "Here." "What time is it?" "Now." "What are You?" "This Moment." Dan then performs his triple consecutive flips, the Commentators frantically speaking, and the judges staring at him in amazement. He then dismounts, while the rings swing outwards, eventually touching each other. The screen goes black, leaving his last moment unknown.

The postscript states that Dan and his Berkeley Gymnastics Team won their first National title. It is implied at the end, in a postscript appearing on screen, that Dan of the film and Dan the author of the book on which the film is based are one and the same. It is also stated that the latter Dan lives with his wife Joy.

Peaceful Warrior received mixed to negative reviews, currently holding a 25% "rotten" rating from Rotten Tomatoes; the consensus states: "Based on a best-selling memoir, Peaceful Warrior loses something in the transition from page to screen. It hits the viewer over the head with philosophical jargon, and ultimately fails to live up to its source material."[3] On Metacritic, the film has a 40/100 rating, indicating "mixed or average reviews."[4]